tv Tonight From Washington CSPAN June 22, 2011 8:00pm-11:00pm EDT
be a sign we need to consider at the beginning and exit process but we are not there at this point. >> what about our negative conditions, for example the situation in europe becoming a contagion situation? >> if the economy worsens and inflation remains relatively low, then we wouldn't begin to exit and therefore we wouldn't change the language. the expected length of keeping rates low would then be longer but again, we wouldn't want to give an explicit -- we could expose that we have at least not chosen so far to give an explicit timeframe. again because it is our intention to continue to monitor the economy, revised a relic irca we just revised our outlook fairly significantly since april and make a judgment based on the incoming data so we don't want to commit ourselves necessarily
to a fixed timeframe. >> you can see the rest of this news conference with chairman bernanke at c-span.org. we take you live to the white house in just a few minutes. president obama will address the nation on his plans to reduce u.s. troops in afghanistan. a quick look at c-span's primetime schedule following the president's remarks and your reaction at about 8:30 eastern.
>> good evening. nearly 10 years ago, americans suffered the worst attack on our shores since pearl harbor. this mass murder was planned by osama bin laden and his al qaeda network in afghanistan. it signaled a new threat to our security. one in which the targets were no longer soldiers on a battlefield but innocent men, women and children going about their daily lives. in the days that followed, our nation was united as we struck at al qaeda and routed the taliban in afghanistan. been our focus shifted. the second war was launched in iraq and we spend enormous blood and treasure to support a new government there. by the time i took office, a war in afghanistan had entered its seventh year. but, al qaeda's leaders had escaped into pakistan and were
plotting to attack us. of the taliban had regrouped and gone on the offensive. without any strategy and decisive action, our military commanders warned that we could face a research and al qaeda and the taliban taking over large parts of afghanistan. for this reason, one of the most difficult decisions that i have made as president, i ordered an additional 30,000 american troops into afghanistan. when i announced this surge at west point, we set clear objectives to refocus on al qaeda, to reverse the taliban's momentum and trained afghan security forces to defend their own country. i also made it clear that our commitment would not be open-ended and that we would begin to draw down our forces this july. tonight, i can tell you that we are fulfilling that commitment. thanks to our extraordinary men and women in uniform, our civilian personnel and their many coalition partners, we are
meeting our goals. as a result, starting next month, we will be able to remove 10,000 of our troops from afghanistan by the end of this year. we will bring home a total of 33,000 troops by next summer. fully recovering the surge i announced at west point. after this initial reduction, our troops will continue coming home at a steady pace as afghan security forces moved into the lead. our mission will change from combat to support. by 2014, this process of transition will be complete and the afghan people will be responsible for their own security. we are starting this drawdown from a position of strength. al qaeda is under more pressure than at any time since 9/11. together with the pakistanis, we have taken up more than half of al qaeda's leadership. and thanks to our intelligence professionals and special forces, we killed osama bin
laden, the only leader that al qaeda had ever known. this was a victory for all who have served since 9/11. one soldier summed it up well. the message he said is, we don't forget. we will be held accountable no matter how long it takes. the information that we recovered from bin laden's compound shows al qaeda under enormous strain. bin laden expressed concern al qaeda have been unable to effectively replace the senior terrorist that had been killed. and al qaeda has failed in its effort to portray america as a nation of war with islam thereby draining more widespread support. al qaeda remains dangerous and we must be vigilant against attacks. but we have put al qaeda on a path to defeat and we will not relent until the job is done. in afghanistan, we have inflicted serious losses on the taliban and taken a number of its strongholds, along with their surge our allies also increase their commitments which
helped stabilize more of the country. afghan security forces have grown by over 100,000 troops and in some provinces and municipalities we have already begun to transfer to the afghan people. in the face of violence and intimidation, afghans are fighting and dying for their country. establishing local police forces, opening markets and schools, creating new opportunities for women and girls and trying to turn the page on decades of war. of course, huge challenges remain. this is the beginning, but not the end of our effort to wind down this war. we will have to do the hard work of keeping the gains that we have made while they draw down our forces and transition responsibility for security to the afghan government. next may in chicago we will host a summit with our nato allies and partners to shape the next phase of this transition. we do know that peace cannot
come to a land that is known so much war without a political settlement, so as we strengthen the afghan government and security forces, america will join initiatives that reconcile the afghan people including the teleband. our position on these talks is clear, they must be led by the afghan government and those who want to be a part of a peaceful afghanistan must break from al qaeda, abandon violence and abide at at the afghan constitution. but, in part because of our military effort, we have reason to believe that progress can be made. the goal that we seek is achievable and can be expressed simply. no safe haven from which al qaeda or its affiliates can launch attacks against our homeland or our allies. we won't try to make afghanistan a perfect place. we will not release its streets or patrol its mountains and definitely. that is the responsibility of the afghan government, which
must step up its ability to protect its people and move from an economy shaped by war to one that can sustain a lasting peace. what we can do and will do is build a partnership with the afghan people that endures, one that ensures that we will be able to continue targeting terrorists and supporting a sovereign afghan government. of course, our efforts must also address terrorist safe havens in pakistan. no country is more endangered by the presence of violent extremists which is why we will continue to press pockets and expand its participation in securing a more peaceful future for this war-torn region. we will work with the pakistani government to root out the cancer of violent extremism and we will insist that it keeps its commitments, for there should be no doubt that so long as i'm president the united states will never tolerate a safe haven or those who aim to kill us. they cannot elude us nor escape
the justice they deserve. my fellow americans, this has been a difficult decade for our country. we have learned the profound cost of war, the cost paid by the nearly 4500 americans who have given their lives in iraq and the over 1500 who have done so in afghanistan. men and women who will not live to enjoy the freedoms that they defended. thousands more have been wounded. some have lost limbs on the battlefield and other still battle the demons that have followed them home. yet, tonight we take comfort in knowing that the tide of war is receding. fewer of our sons and daughters are serving in harm's way. we have ended our combat mission in iraq with 100,000 american troops already out of that country, and even as there will be dark days ahead in afghanistan, the lights of a secure peace can be seen in the distance.
these long wars will come to a responsible and. as they do, we must learn the lesson. already this decade of war has caused many to question the nature of america's engagement around the world. some would have america retreat from our responsibility as an anchor of global security and embrace their very real threats that we face. others would have america overextended, confronting every evil that can be found abroad. we must chart a more centered course. like generations before we must embrace america's singular role in the course of human events, but we must be as pragmatic as we are passionate. as strategic as we are resolute. when threatened we must respond with force but when that force can be targeted, we need not to play large armies overseas. when innocents are being slaughtered and global security in danger, we don't have to choose between standing idly by
or acting on our own. instead, we must rally international action which we are doing in libya, where we do not have a single soldier on the ground, but our supporting allies in protecting the libyan people and giving them the chance to determine their own destiny. in all that we do, we must remember that what sets america apart is not solely our power. it is the principles upon which our union was founded. we are a nation that brings our enemies to justice while adhering to the rule of law and respecting the rights of all of our citizens. we protect our own freedom and prosperity by extending it to others. we stand not for empires, but for self-determination. that is why we have a stake in the democratic aspirations that are now washing across the arab world. we will support those revolutions with fidelity to our ideals, with the power of our example and with an unwavering
belief that all human beings deserve to live with freedom and dignity. above all, we are a nation whose strength abroad has been anchored in opportunity for citizens here at home. over the last decade we have spent a trillion dollars on the war at a time of rising debt and hard economic times. now we must invest in america's greatest resource, our people. we must unleash innovation that creates new jobs and industries while living within our means. we must rebuild our infrastructure and find new and clean sources of energy. and most of all, after a decade of passionate debate, we must recapture the common purpose that we shared in the beginning of this time of war. for our nation draws strength from our differences and when our union is strong, no hill is too steep. no horizon is beyond our reach.
america, it is time to focus on nation building here at home. in this effort, we draw inspiration from our fellow americans who have sacrificed so much on our behalf. to our troops, our veterans and their families, i speak mack for all americans when i say that we will keep our sacred trust with you and provide you with the care and benefits and opportunities that you deserve. i met some of these patriotic americans in fort campbell. way while back i spoke to the 101st airborne to turn the tide in afghanistan and to the team that took out osama bin laden. standing in front of a model of bin laden's compound, the navy s.e.a.l. who led that effort paid tribute to those who had been lost. brothers and sisters in arms whose names are now written on bases where troops stand guard overseas and on headstones in quiet corners of our country where their memory will never be
forgotten. this officer like so many others i've met on bases in baghdad and bagram and at walter reed and bethesda naval hospital spoke with humility about how his unit worked together as one, depending on each other and trusting one another as a family might might do in a time of peril. that is a lesson worth remembering, that we are all a part of one american family. we have no disagreement and division, we are bound together by the creed that is written into our founding documents and a conviction that the united states of america is a country that can achieve whatever it sets out to accomplish. now, let us finish the work at hand. lets us responsibly and these wars and reclaim the american dream that is at the center of our story. with confidence in our cause, with faith in our fellow citizens and with hope in our
hearts, let us go about the work of extending the promise of america. for this generation of the next. may god bless our troops and may god bless the united states of america. stay in his speech that ran just about 12.5 minutes the person from the strum of the white house announcing plans to withdraw 10,000 u.s. troops by the end of this year and 30,000 by next summer. our phone lines are open to 025-85-3885 is the line for republicans in (202)585-3886 for democrats. if you are an independent the number to call his (202)585-3887. we will get your calls and comments in just a moment. the president tomorrow traveling
to ft. drum, home of the tenth mountain division. many of those soldiers coming back from afghanistan also on capitol hill tomorrow we will learn more about plans with general david petraeus as the next cia director and secretary of state hillary clinton traveling on capitol hill. joining us live on the phone, thank you for being with us. let me begin by asking you about another timetable the president put forth in his speech, 2014. what will afghanistan look like in three years? >> caller: that is a great question and frankly it is the most important question that we can't fully answer. what we can say in a best-case scenario the strategy that the president has laid out and recommitted to end the speech, if it works, afghanistan with a much bigger army, much bigger police force, central government that even if it is corrupt, even if its it's reach does not extend across the country, and
this will be uncomfortable for many americans but the taliban are legitimate formal recognized part of the government much like in lebanon. that to me is a emotional question, will americans be able to stomach the fact that the taliban, the group the sheltered al qaeda that have been fighting and killing american troops now for almost a decade, that they will be part of the next government. in the best-case scenario they will be. i think that will be a tough thing to allow people to get past. >> host: just a few minutes ago speaker john finishing a statement saying quebec i'm pleased the president recognizes success in afghanistan is paramount. you on to say it is important that we maintain the flexibility and reconsider troop levels as the situation continues to unfold. what do you read into that? >> caller: i think would gain or is hinting at sort of indirectly is something that's what we said a lot more explicitly tomorrow and the days to come which is this, in the
past almost every major decision they have made, president obama has referred to the military military and to the pentagon so weather was surging troops into afghanistan initially, what it was the pace of a withdrawal from iraq which has gone much more slowly than a lot of his colleagues would like he is deferred. is interesting here is general petraeus general petraeus the top commander in afghanistan his is take as you mentioned bowman to go is the head of the cia. general petraeus does not endorse this plan. general petraeus wanted to keep the surge troops in afghanistan at least through the end of next year. instead obama took that advice into consideration and rejected it and said -- and he hinted if you listen to this speech carefully he hinted there might be more withdrawals next year beyond the surge. so this'll be the first moment in his presidency where there is a very clear very public divide between the president and the best known general americans and several decades and i think you'll see republicans hit the
president about that point a lots beginning tomorrow. >> host: as the president said moving to pre-surge levels so 30,000 troops that were brought forth at the start of the obama administration down to about 6,016,000 troops in afghanistan by this time next year. >> caller: exactly. with a hand as he said that others would follow beyond the surge troops. he talked about it being a sort of regular sustained pattern and that was something that was very important for democrats on the hill. last week there was a letter signed by 27 lawmakers, mostly democrats, including the entire democratic senate leadership with the exception of majority leader reid, that use the phrase sustain. they wanted to see the withdrawal be taken they wanted to see many of them and obama gave them a bit of a loan by saying it won't just be the surge troops leaving but there'll be other troops following than perhaps as early as next year. >> host: we will get to calls and comments and in moment but if a final question who was the president's audience tonight?
typically it is three or four or five different groups is trying to appeal to. >> caller: you put it exactly right stephen i think in this case what is interesting is that those same number of groups -- typically when you give a speech like this you are trying to keep their base with you and win over the people who are not on her side to maintain support. in every previous speech given about the war, the pace was the republicans interesting than the people who are uneasy with the democrats. what is changed now is that not only are the democrats -- but republicans are too. there were two republicans who signed the letter, john huntsman and in every speech he gave explicitly saying more troops need to leave in the president has said will lead. so he is addressing as you point out many of the audiences, taliban, the afghan government in the pakistani government, the american public, democrats and interesting is the full
divisions don't line up. now does not just democrats, it is republicans as well so when you are trying to speak to that than the audience as many of whom are hostile to you from the beginning it is a very tough message to get across. >> host: yogi drazen who cover security issues for the national journey his story available on line at "national journal".com. the president pulling 10,000 u.s. troops out of afghanistan this year and another 20,000 next year. thanks as always for being with us here on c-span. want your phonecalls, richard joining us from minneapolis. good evening. on the democrats line. >> caller: yes, what i want to say is that i think that is great he is pulling out the troops, and we have to remember that there there are civilians when they come home and we have to still treat them like we would want to be treated. you know, and we have to remember that the republicans are the ones who created this war and it is costing us all this money, and this money, and this money could have been better spent to create jobs and
keep our economy going instead of sending them over there and putting them in harm's way. but i'm glad that he is drawing them down and i think that is great, and we treat them with respect and honesty and dignity when they come back. corning to "the wall street journal" u.s. efforts in afghanistan over the last 10 years, price tag of $485 billion. that skull is john, republican line, columbus ohio. your reaction to the president's speech about afghanistan. >> caller: i am glad he is -- we need to get up out of there. i am a republican. my party screwed up big time. george bush gave us the big joke of all time. but i am glad that this man is getting our boys up out of there. they need out of there now because let's be america, let's be real. those people in afghanistan are always going to keep fighting. that land has been lulled us.
i'm glad we are getting up out of there. i am glad our boys are coming home and it is time we get up out of there. too much money is being spent. the people here in america are going broke. on employment is through the roof. i'm glad he is getting them up out of there and i hate it when i watch people in this senate keith pickering about stuff. obama is doing this, i loved this piece. come on republicans we have got some screwed up people in our party. >> host: this marks the sixth time in the obama administration of president has addressed the nation on afghanistan. the next caller is troy from vallone, new york independent line. good evening. >> caller: good evening. i just think tonight's speech just shows you know what a political mastermind a president can be. the timing, we are just a little ways away from an election year, and asked her about this time we can talk about the 33,000 people that we have pulled out.
your previous two colors may could sound like the republicans started the war or asked for the war. i think it was osama bin laden who actually asked for this war, not the republican party. so, i think we need to keep ourselves in check and pay attention to what is really being said. with sounds good on the surface that some people are coming home but let's remember we still have people in korea. we still have people in germany. we still have people all around the globe so i think tonight was just a political show. thank you. >> host: for members of congress will be joining us tomorrow to get your reaction and give us their reaction to the president's speech including congressman steve king a republican from iowa represented keith ellison of iowa, more secure or democrat from ohio and the republican from virginia. john is joining us from georgia, republican line. good evening.
>> caller: yes, this is john from georgia. i agree with the president over the withdrawal. you know, 10,000 this year, 20,000 next year. and i agree with it a cause it is time to bring the troops home and we can focus on the economy right now. a lot of things we need to be doing at home instead of abroad right now and this is a good step, bringing the soldiers home. >> host: echo mike olin testing before the house armed services committee tomorrow, a series of obama's cabinet members on the hill tomorrow general general david betrays his confirmation hearing to be an ex-cia director and secretary of state hillary clinton testifying before the senate foreign relations committee. all of this available on our web site at c-span.org. we are getting a reaction to the president's speech from the white house. wesley, democrats line, sacramento california. >> caller: good evening.
thank you very much for taking my call. i think that the president gave a very good presentation. i was disappointed, i am a retired marine, former recruiter and i think the thing that we did that was wrong in the first place was when we knocked out the direct. if we had a draft in place, i was on recruiting duty when that happened in 73 and i think if we had a draft in place and more people were -- this fiasco we wouldn't be in afghanistan right now. i was hoping he would say he would bring home 50,000 trees but what the heck, it's a good start. >> host: frederick and washington state, independent line. good evening. what did you think about the president's speech tonight? >> caller: good evening stephen thank you for taking my call, my favorite host on c-span and i don't get them very often.
i am sorry to say i miss the top of the speech, but i knew the numbers and i like the way he spoke of the reasons and the consequences. my point is that i have been reading the book by seth jones called -- about afghanistan. the title is the graveyard of empires and it tells the whole history of events of that country and how no forward army has ever gone in there and succeeded and never will. and, i couldn't even finish the book it was so sad about all -- >> host: what do you think afghanistan is going to look like a year from now with about 60,000 u.s. troops, not 100,000? >> caller: well, a sickly it will look a lot better than when we came in, because a lot of
things have been done by aid and ngo's and the united nations can take it from there. we will still have 60,000 american troops. so, i would like to see it and sooner than later, but by the end of obama's second term i think it will be totally drawn down and i hope that is the way it goes. >> host: frederick thanks for the call from washington. solomon and joining us democrats line from new mexico. good evening. >> caller: good evening. i'd like to express my thoughts about the president's speech. i thought he was ella quentin very articulate, the person i voted for originally when he ran for president. i think he is really being hampered by the consequences that were left by, let's face it, the republican party. the tax cuts for the upper class, or let's say industrialists, the 2% on the
backs of the majority of the population. bad is the fact he has had to deal with and i think people have to realize that. >> host: in case you didn't miss his speech with all of our programming posted on line, c-span.org, part of c-span's video library. let's hear from a republican from richmond, kentucky. dean is on the fun. good evening. >> caller: hi, thanks for taking my call. i just wanted to say that i think the president did the right thing. i think it is about time we got out of afghanistan and you know imagine how much other things we could be doing with that money. i mean we don't need the money over there. we need to be taken care of our own people first. where does it say that we have to take care of the world? we have our own problems and we have other countries you know
that just, you know we have our own country that needs the money before others. i just wanted to say that so thanks. >> host: george joining us from mount olive north carolina, independent line. good evening. >> caller: i think we need to get the contractors out of their first and then the military going in and filling in where the contractors were. is not right for the contractors to be putting 80 to $120,000 the ceo putting millions of dollars in their pockets while her soldiers are being paid 20 to $40,000 now. let's get the contractors on the people who keep saying we get out of the war and put the money in this country where it needs to be, that is money is not ours. when you are weightier barring that money. let's get the contractors out. which george bush and cheney who has made private privatizing the war, getting the contractors out. that is the military's job. >> host: again the headline
they came from the president's speech tonight, 10,000 u.s. troops moving out of afghanistan this summer and fall and another 20,000 next year by the summer of 2012, and estimated 60,000 troops in afghanistan. you you can watch the press and speech on our web site at c-span.org. we will continue the conversation far morning on the "washington journal." for members of the house of representatives scott rigell, republican of virginia marcy kaptur democrat of ohio and the steve king republican of iowa and keith ellison a democrat in minnesota will take your calls and react to the resident speech from the white house. thank you for being with us on this wednesday. more coverage tonight on the c-span networks.
sheila bair chairman of the federal deposit insurance corp. called on lawmakers say to implement higher capital requirements for banks. this hearing before a house oversight subcommittee is expected to be ms. fair's less on capitol hill and her role as head of the fdic. she recently announce she is stepping down when her five-year term expires next month. this is about 50 minutes.
>> the committee will come to order. today's hearing on the t.a.r.p. financial services and bailouts public and private programs subcommittee is entitled the changing role of the fdic. we have before us today the 19th chairman of the federal deposit insurance corp., sheila bair who has served honorably during some of our nation's toughest times and chairman bair we realize this is your last hearing before congress, and you have had quite a career in the service to our government and to our people and i want to thank you for that. and, it is through some of the most challenging times in our nations history and you have also served on capitol hill. we appreciate your service there. what's that? well, we forgive you for that. serving on the senate side, but certainly understanding capitol hill as you do, we thank
you or your time. and, it has been the tradition of this subcommittee to read the oversight and government reform committee's mission statement. the oversight committee mission statement begins, we exist to secure to fundamental principles. first americans have a right to know that the money washington takes from them is well spent and second, americans deserve an efficient effective government that works for them. our duty on the oversight and government reform committee is to protect these rights. our solemn responsibility is to hold government accountable to taxpayers because taxpayers have a right to know what they get from a government. we will work tirelessly in partnership with citizen watchdogs to deliver the facts to the american people and bring genuine reform to the federal bureaucracy. this is the mission of the oversight and government reform committee. i now recognize myself for five minutes for an opening statement. as i said we are pleased to welcome the chairman of the
fdic, sheila bair for her last testimony before the united states house of representatives. we certainly appreciate your role and your hard work, and we wish you well in your future endeavors. today's discussion allows members to better understand the role of the fdic during the financial crisis, the new regulatory authorities issued by dodd-frank and they help of fdi insured banks. since 2007 fdic has called upon, has been called upon to resolve 370 failed frank sent drift. these efforts have cost the fdic and estimated $83 billion a pleated the balance of the deposit insurance fund, pushing it into the red ink to the tune of a billion dollars. chairman bair has taken steps to replenish the funds and i think american people should know that this has not cost the taxpayers a dime. that in fact this is self-funded
i the banking industry. due to the fdic's role for most of the world's largest financial institutions, the dodd-frank asked positions the corporation is a key player in preventing a future financial crisis. dodd-frank requires or authorizes the fdic to implement 44 new regulations and grants the regulator of various enforcement authorities. and a vet stem directly from dodd-frank's hope to and too big to fail. among these regulations are risk retention rules that will dramatically impact the secondary mortgage market and other areas of securitization as well as increase capital standards set out under dodd-frank and being negotiated under basel iii or is in the south we call it basel iii. although these measures had some bipartisan support in theory, concerns have been raised during implementation. new risk retention rules could reduce the amount of lending to
an already crippled housing market. while extreme capital standards may jeopardize the global competitiveness of u.s. financial institutions. just yesterday acting comptroller general, i'm sorry comptroller of the currency, john walsh, stated that additional capital requirements for a large firm should be modest, noting that quote o. bulls are now extraordinarily high by historical standards and quote. he specifically caution that quote higher capital fosters a safer banking system but if carried too far, the economy suffers when banking activity is not sufficient to support desired levels of real economic activity. i think we all share those concerns and finding that balance is of course part of today's hearing is to understand your thought process on that. each member of the subcommittee hears from constituents and businesses that are struggling to access capital.
buzz, before instituting a regulation it is imperative regulators consider the flexibility are small and committee banks need to serve our communities. i look forward to chairman bair's explanation is how out of the fdic and other regulators will work to avoid one-size-fits-all regulation that would deteriorate job growth in our economy are going additionally, while some insist that fdic's new regulatory authority under dodd-frank will put an end to the bailout culture and too big to fail, it appears the opposite is true. the special inspector general for the troubled asset relief program has reported to congress that even after dodd-frank, but the largest institutions continue to enjoy access to cheaper credit aced upon the existence of the implicit government guarantee against failure. ironically dodd-frank is actually made big banks even bigger. five of the largest financial situations in this country are
20% larger than they were before the crisis. now this is not directed at the fdic. rather, many of these things are designed failures in the legislation we passed and i will have some questions about that and how you see that implementation and perhaps some legislative relief on many things you don't think are quite appropriate going forward. even secretary geithner noted the possibility of future bailouts when months ago he stated the federal government might have to do quote exceptional things again and quote. ii know you have been questioned about that before but the moral hazard of such explicit and implicit guarantees cannot be overstated. these concerns along with others that chairman bair and i both have spoken about are critical or are of critical importance to the economic future and well-being of the united states and as citizens. getting that balance right is a struggle, and in terms of capital requirements, we would like to hear your thoughts on
that. and with that, i recognize the ranking member, mr. quigley of illinois, for five minutes. >> thank you mr. camp and thank you for holding this committee meeting and chairman bair thankk you for attending and for your years of service. obviously the fdic plays a central role in navigating the 2008 financial crisis, specifically of overseeing two of largest bank failures in u.s. history, washington mutual and indymac bank. in addition the aftermath of the crisis, chairman bair has actively engaged in implementing the necessary reforms to prevent another financial crisis. as the chairman's tenure comes to a close, plea for insight and perspective will be invaluable to the subcommittee's oversight of the events that comprise the financial crisis as well as the implementation of dodd-frank and other reforms aimed at bringing greater transparency and stability to our financial markets.
while there are multiple causes of the financial crisis it is that is widely knowledge regulatory failure through gaps in oversight, and sufficient tools and weakening of bank regulations was a significant factor. therefore, dodd-frank addresses these values by creating the financial stability oversight council to ensure coordination among the multiple banking regulators. it also extends the fdic's resolution authority for failing depository institutions to large non-bank financial firms and require stronger capital standards for the largest financial institutions. these and other provisions have significantly alter the authority and responsibility of the federal banking regulators, including the fdic. i was heartened by the chairman's past statements that through the orderly liquidation authority and capital requirement provisions that regulators the regulators have the tools to and too big to fail. still unconcerned by the fact that in 2009, bank of america, chase, citigroup and wells fargo control 56% of domestic ranking
assets, up from 35% in 2000 while the top 10 u.s. banks controlled 75% of domestic deposits, up from 54%. i hope today's hearing will provide an update on the implementation of these too big to fail print is -- barrels a number of fdic related provisions under dodd-frank that are critical not only to ensuring financial stability but also to leveling the playing field between the largest financial institutions which have only expanded since the crisis and the community banks and credit unions. these provisions relate to capital standards as well as the manner in which the fdic is assessed and i look forward to hearing from chairman bair regarding the status and implementation of these reforms. chairman bair -- lastly chairman bair has been praised as guiding be greater prominence through her fierce advocacy not just for
community banks but also for consumers. in this regard, i commend you for your tireless efforts to hold accountable our nations mortgage servicing industry. this is in and she that continues to engage and allege systemic abuses and misconduct against homeowners across the country. in your own words, the mortgage service documentation problems are yet another example of the implications of lax underwriting standards in the mortgage process. despite numerous investigations and regulatory actions taken by federal and state regulators and law enforcement officials against the mortgage services, more allegations of misconduct of service. therefore look forward to hearing from the chairman regarding further steps they can be taken by both regulators and policymakers to hold the servicers accountable and protect our constituents and communities from wrongful foreclosures. and again, i thank you and i thank the chairman for appearing before us today and your service to our country. thank you. >> i:the ranking member and with
that, chairman bair, it is the tradition of the oversight and government reform committee and the policy of the committee that all witnesses be sworn in so if you will will please standard measure right hand and repeat after me. do you solemnly swear or from the testimony you are about to give will be the truth, the whole truth and nothing but the truth? thank you. you may proceed. let the record reflect the witness answered in the affirmative. and again thank you chairman bair. we have sent under republican and democratic presidents. you've had a distinguished career in government service and we wish you the best going forward. with that we recognize over five minutes for an opening statement. we know that you know the drill with the lights and we look forward to hearing your testimony. >> thank you chairman mckenna, ranking member quigley and members of the subcommittee. thain the opportunity to testify on the changing role of the fdic. my testimony today focuses on two important lessons learn from
the crisis. first in order to restore discipline in the marketplace large complex banks and other financial companies bus without exception be allowed to fail and become nonviable. the problem for our financial companies unfortunately has been around for decades. the bailouts of several deadly badly managed is chemically important financial institutions during the crisis groves all of doubt about their backing. these bailouts and were made necessary by the absence of fdic solution powers for non-bank financial institutions as well as for bank holding companies and their don bank affiliates. the massive disruptions caused in the lehman failure made clear the bank was ill-suited for the resolute entities. forcing bankrolling companies into banks process was not orissa government was willing to take. the bailouts have consequences. band the end of my market discipline, they inhibit the restructuring of troubled financial companies in the back mission of losses.
to keep substantive management in place and preserve the sub optimal allocation of economic resources. in conscious smaller banks are fully exposed to the discipline of the marketplace. sum 370 fdic insured institutions that failed have failed since i became fdic chairman. this is how capitalism is supposed to work. failed companies get give way to successful companies and the remaining assets and liabilities are restructured and return to the private sector. bailouts are inherently unfair. they violate the fundamental principles of limited government in which you are free enterprise system is not it. that is why the fdic was so determined to press for a more robust and more effective resolution framework as the centerpiece of a financial reform legislation. they were early advocates for receivership authority fabrics like the one we have applied thousands of times. [inaudible] in relation to the risk-based
count pennies post to financial stability. while these proposes world's mail enacted in dodd-frank there does remain skepticism as to whether they can be made resolvable and a crisis. for the very largest institutions it will be difficult but we have many important tools which have used correctly can and too big to fail. under dodd-frank we will have more information about these institutions on an ongoing basis. stronger prudential requirements living wills prepared in advance as well as the authority to require if necessary organizational changes that rationalize business lines and legal entities to assure that they can be broken up and sold back to the private sector in an orderly way. i hope this is an air where the industry will work collaboratively with the government. the expectation of bailouts grates funding advantages for week large banks, creating competitive disadvantage is not only for smaller institutions but also for the better manage larger institutions. most important of the reputation of the entire industry has damaged him poorly managed
institutions are bailed out by taxpayers and escape responsibility for their own actions. because of the bailouts, popular resentment and cynicism toward the banking sector remains very high. the second lesson of the crisis involves the dangers of excessive debt and leverage. the single most important element of the strong and stable banking system is its capital base. capital is what allows an institution to absorb losses while maintaining the confidence of the counterparties and its capacity to lend. after the last banking crisis in the early 1990s, congress passed a number of important banking reforms that included stronger capital requirements. the capital requirements for water down over the years through rules permitted use of capital to encourage banks to move assets off the balance sheet and set thresholds based on internal risk models. the result was an increase in financial system leverage particularly at bank holding companies in non-bank initial companies that weakened the ability of the industry to absorb losses during the crisis
and that is led to a dramatic emerging of banking assets in its wake. the problems of excess leverage extends far beyond banking. our tax system rewards the use of financing over equity for businesses and households alike, making them more vulnerable to financial distress. governments too have relied on data both on the cost of paying for services that the constituencies are reluctant to do without. but as the crisis has shown over reliance on leveraging this short-term strategy with a big downside of the longer-term. that is where the fdic has been committed to following through on the capital reforms taking place through the three international -- that is also why we have been such on supporters of other measures to enhance capital including the collins amendment 2 dodd-frank, the elimination of trust preferred securities and the tzipi capital surcharge. since 1933 public confidence in financial stability up in the core missions of the fdic. we understand the economic cost of financial crises and one of
the most important lessons i have drawn from my experience has been the need for regulators to have the political courage to stand firm against week texas is an excessive risk-taking in the good times. by main regret is who did not have better information and better resolution tools in place at the height of the crisis to prevent the bailouts of a number of our nation's largest financial companies. yes the bailouts were necessary and under the limitations we face but they have undermined support for government in all forms, tainted the revocation of well-run banks and tilted the competitive balance towards weak megabanks. our support for more robust resolution asim and stronger capital standards in the wake of the crisis speaks to our determination that this experience never be repeated. thank you and i'd be happy to take your questions. >> thank you very testimony. i now recognize myself for five minutes. as i said in my opening statement, the acting comptroller of the currency,
john walsh, stated in our interview the other day that additional capital requirements for large firm should be "matt modest, noting that capital levels are now extraordinary high by historical standards and higher capital fosters a safer banking system but if carried too far the economy suffers when banking activity is not efficient to support desired levels of economic activity. chairman bair, i know we have noted that you and the acting comptroller of the currencies had disagreements on capital levels. is there a capital level requirements that is too high? >> well, think there certainly could be but i don't think the numbers we are talking about really come anywhere close to that. we are working on a process. i think it is important of international agreement on the appropriate standards and the committee is done a lot of anneka livable work on this looking at the cost of the
crisis, the amount of losses on financial institution balance sheets and how much additional capital would have been needed to absorb those losses to afford this deleveraging that we experience. it is also try to weigh those costs against incremental cost, increases in lending from higher capital standards and so the numbers i think i very much tried to strike the right balance. the docile prestandard which i don't think acting comptroller walsh has a disagreement with has been agreed to but as part of that agreement there was broad-based consensus on the basel committee including with mr. walsh that we would be looking at higher loss of capacity for the largest institutions and that is a process now. i have been on record saying it stanford be about right. that is moderate when you look at most of the studies that have been independently done by academics or the government, actually the studies generally
support much higher capital levels based on the type of analytics i describe. "the wall street journal" in a recent editorial endorsing much higher capital standards throughout 15%. i thought it was interesting the benchmark they were using let the market do vance of a smaller finance company which clearly has no government support whatsoever, and the market demand 15% capital report in its. so i think the 10% actually is moderate by all the -- we have looked at. would also add that this is going to go out for comment. whatever they number they agree to it will explain the numbers between the analytics. >> how are your metrics different from the occ's? >> i don't know. i haven't had a chance, i really haven't seen. apparently occ is done independent analysis that i have not seen and i would welcome looking at it. i think perhaps he is looking at historical numbers but historically i think there is probably a case the financial system is not have sufficient capital and this is why we continue to have these cycles
of, very severe one recently. also if you are looking at at risk-weighted assets unfortunately for all the subjectivity and capital levels based on how a bank is -- is assets so i don't know if the analytical and their penning is for his views and i would be happy to take a look at them. >> and i'm not asking about the health of european banks but in terms of international competitiveness, isn't it important that we are harmonized globally with these capital requirement level so we are not disadvantaged? >> i think it is important we have international agreement. i think capital, strong capital is a competitive strength and a competitive weakness and i think european banks are having some trouble now because the way they risk weight their assets is -- does not have the confidence of the market. i think also the problems they are having with greece and other distressed companies, with their sovereign debt and the inability to restructure that is related
to the high levels of leverage in their banking system and their inability of some of their banks to withstand the write-downs on that debt. if there was a debt restructuring. i worry about this impact it could have coming back to the united states. i think international agreement is important to get those capital levels up. >> and finally i want to ask you in terms of the dodd-frank law as it is proposed by congress, are there items that we should address as your walk out the door? are there items that we should address to fix, to correct improve, to change dodd-frank? it is intended to be an open-ended question. >> so i think it is not a perfect love. certainly there were things we would have liked to have seen differently, and we can ensure ensure -- share those views with you. i think on the title to authority we feel like we do have the tools that we need.
and so, i do believe that it is a good law and we are better having it than not having it and the parts that fdic has a mandate we can work with. >> so you didn't take the bait. >> i didn't take the bait, sorry. >> perhaps in another month we can have another conversation. with that i recognize the ranking member mr. quickly for comment. >> thank you. coming from illinois small banks and community banks he touched on competitive disadvantage. what else can we do? >> well, think the good news is the banking sector is healing. it is really all about the economy now and getting the economy on a stronger footing. so borrowers will want to start borrowing more money. even smaller banks are raising more capital. a lot of them are actually coming off because they have raised capital. so i think there are some very positive improvements in the community banking sector. it has been tough for them.
but you know, if you look at the number of community banks that got in trouble as a percentage of assets as well as numbers it is smaller than the disruptions we saw with a large institution so most of them actually manage through this very well. they manage their commercial real estate concentrations pretty well and we are actually trying to learn and our supervisor process, trying to take lessons learned from the successful community banks and fine-tune our own supervisory process. chairman mchenry mentioned this as well. i've induced -- measures to tier tier -- to tier. if you apply them across the board to small banks even if it doesn't have much to do at the business model of small banks can make it expensive for small banks. they don't have a huge compliance department that large banks have so i think two-tiered
regulatory approaches are important. is simplification of consumer rules and consumer disclosures with help consumers and community banks. of community banks have gotten out of consumer lending just because the rules are so complex and complicated. they don't have faith compliance capability to deal with the. >> that is a specific likely hear quite a bit about the regulatory process. the terms they are using, harsh regulatory examination, depressing impacts that these practices have on their ability land and some very specific stuff. senior regulators in d.c. keeps saying that they are properly instructing their field examiners that bankers are saying the field examiners aren't following the rules. and we hear their art there are inconsistencies in their decisions. the higher up are saying their plans are being implemented locally. the examiners are telling the bankers that their decisions are being changed up above what they
time back on how these decisions get back to banks which create inconsistencies and a real problem moving forward. >> well, i do this hear this a lot and i can play the measures we have taken. i am beside myself to figure out what else to do. we have told our senior analyst very directly that loans shouldn't be criticized because collateral has fallen. if you have a creditworthy borrower if collateral has down -- on down is still a good long. is not required new appraisal from last more credit is being extended and obviously you want to get an appraisal so i have said they specifically this specifically said that in writing. we have disseminated this information to banks. they feel examiners are doing it inconsistently they can tell that to the examiner. we have to learn examiners they need to be independent of banks. they have a job and appended to the bank but they do need to listen to bank management and hear their side of it and discuss it with them directly
with their concerns are. so we have done all this. we have set up a special special hotline numbers for bankers. we have an on put my program that we will keep it confidential if they don't want their names to be used. i frankly, we have really worked hard on this. we are not perfect. we have a lot of banks so perhaps the challenge of getting this communication are to examiners is more pronounced for us to get to the sheer numbers. ..
>> thank you, mr. chairman and for your service to our country and we would yield back my time to the chairman mchenry. >> thank the gentleman. that is kind and gracious. now, we mentioned -- you mentioned the program you have the hot line i will be very honest with you we are going to have a second panel and we've reached out to different associations here and invited bankers and they're all wanting to appear on the second panel discussing -- >> how should i take that? [laughter] >> it's not personal, first of all, but there is -- it's either that the complaints that are going to air publicly ha why is
that, that's one of potential. are they so fearful of their regulator or are they fearful of the public thinks of them confining and one of those things they will grumble because they don't want to get into the specifics and it may just be washington politics. i thought that was a little odd, and so wrestling with that concept because i am concerned about regulatory overreach as we've discussed privately, but there is a balance. so, you know, we look at our banks and communities, and mr. quickly mentioned this as well we don't know the health of their balance sheet or if they have over exposure in the raleigh and for instance, and so they are telling their customers its the regulators that won't make me do it.
it's an imbalance in the balance sheet. or they've got a capital problem challenge. so,. i've been dealing with this a lot. i think when they shouldn't -- examination process where the leadership yields that way and it's important for that process to be one where there is an issue that procedures haven't been followed appropriately the can be brought to our attention in a way that we encourage and don't penalize so we can look into it. it's frustrated because i get a lot of generalized complaints when i say tell me what it is so i can fix it let's look into it and i will fix at and i don't get in the specifics and a a
little bit of both. it's my policy and will be the vice chairman and chief of policy and a policy of the leadership and the risk-management division to encourage and comedy and looking to every single complaint and not the other way around. it doesn't mean we are always going to agree. we do look into them and find ways of doing things appropriately and there's been instances we found something else and take appropriate action if people don't want to come forward this so much i can help with. >> it's one of those things we all deal with and we want to fix problems where we can fix it. >> there's another question that kind of goes hand in hand with this. use of the news last week or the week before with jamie dimond's question of the german bernanke, sort of the cumulative effect of
the regulations and the impact they will have on the cost and availability of credit. has there been a holistic review by the regulators or the fsoc regulations we agree and i think it is just economic fact that the do have an impact, additional capital does cost but there's a tipping point for safety and soundness by which you have to be there in over the long term it could be in the positive. so can you comment on that? >> well, i don't think it has been at the fsoc level. certainly with regard to capital there's been a lot of cost-benefit analysis and the rules we do and actually our ig just looked at this congress and we follow the requirements and cost benefit analysis. a lot of economists and looking in particular a community
banking and for any rule or guidance we put out we have a separate line that says the community bank in pact will be so yes on the individual agency basis it is referring it might be for the fsoc agency basis to look at this. i do think there are relationships with what we are doing with the derivatives rules and proprietary trading what kind of impact will be how they relate to capital. i think there would be the hot line agency analysis but in terms of raising capital i'm very confident that there's been very good analysis and the the numbers now are more than justified. >> thank you. i recognize mr. ne of pennsylvania for five minutes. >> thank you mr. chairman and chairman there for your service to the country. certainly a very challenging time for the nation, and i am sure you were looking for an opportunity to enjoy the life thereafter.
but again, thank you for your service. there are so many aspects of the impact of what we try to do in response to the many problems that occur, but i see it back to the eyes of many of the people in my district who are facing issues locally and i was intrigued by your comment many of the smaller banks are the ones that are competing now at a disadvantage because of the rules that have been focused on the large banks and i hear a lot in my community particularly in the housing sector, home builders, realtors, bankers and they're seems to be a game in which they are all pointing to the other one and saying they're the ones responsible for not allowing us to get going and everything i study indicates a robust housing market is the key to getting out of an economic slump. and in and out of underwater mortgages will bust out but also
see small community bankers with respect to responsible institutions who have weathered this area very well and builders with dree good reputations who've proven their capacity to analyze the market and right now some are actually looking to say now's a great time to take risk if you understand your market and yet what i am understanding from talking and meeting with my home builders is that many of them are up against what you're concerned about as hard caps for construction lending and development funding and what i need to understand is whether or not this 100% hard cap is really that coming an advisory or creating the kind of hard line standard that locks in the inability for local bankers and local builders to do what they've been doing for generations which is to make sound judgment about each other.
>> to the failures we've had for the smaller institutions they've been almost heavily driven by the losses and construction defoe of that lending and high concentrations. it's a bench markets not a cap to read the general rule is 100% the shouldn't go over 100% and if they do we need to have special risk management process these in place at the level one involved in managing those risks. there's a lot of scrutiny of the lending it's not a hard cap but there's other scrutiny and well justified given the number of banks we have seen because of the heavy concentrations in that area and it depends on the local market but obviously some areas are heavily overbuilt already, and so it's the last thing you need to do is start a new housing tracts, but that is based on the local conditions and examiners are asked to look at the local conditions.
>> they're taking in not only the local conditions that history of both the builder and the institution obviously they don't analyze the builder but they are building for the builders through the analysis by the bankers. i'm hoping that that is an issue that can continue to be analyzed on local level and the regulators will take into consideration that impact. the other issue we're getting a lot from the realtors and he made comments on dhaka qrm and some of them included whether we ought not let if i'm correct the incentives deal with it rather than this hard and fast rule can you give me your instinct on that? >> i market oriented persons with weaken the the market oriented incentives drive rather than regulators micromanaging this is what the lending standards should be a i would prefer that approach. so i think it's a very difficult, i think the
securitization process got completely out of control it was a huge driver of the crisis. it needs to be reformed to. my sense is that meaningful risk retention scheme and the game will be the best way it can disciplined underwriting standards i would like to bring the securitization market going back. i would like to have the banks and the divers diversification funding of devotee but it needs to be brought back in the right way, and already we are getting into the debates of writing to the staff put together what they felt objectively based on a lot of analytical work or the quote on quote gold standard which was a directive of the legislation. the qrm was meant to be an exception, not a rule and now we got into arguments about are we setting the standards too high is this going to disadvantaged people, and yes, my preference would be everybody has to keep scan in the game put it that way as opposed to the regulators to micromanage what the lending
standards should be. i can see that freely because i won't be part of the decision making. that and i agree chairman mchenry spoke of this we need the mobile disclosure securitizations and the mortgage-backed securities need to see the loans inside the securitizations before they make an investment decision would be a very good check on underwriting standards. >> your perspective as important as we look at policies. thank you. mr. chairman, i yield back. >> we have votes on the floor now, and so it's my intention i just have two or three more questions to ask and then we will be able to adjourn. but, yesterday i read about a meeting that you had yesterday. two plus sort of a somehow meeting of all the bank - and sort of, well -- >> advisory committee
>> and you had discussions about this liquidation was a significant or of the day in terms of question there's no agreement on the sort of proper way to approach this was their consensus, can you comment on that? >> we weren't looking at consensus putative is a first meeting in the advisory committee on systemic resolutions we have a lot of senior prominent people representing a lot of different segments of the industry as well as academia. and so i think the challenge to us and raised questions, and i think it helped clarify our thinking and that is what we wanted to get out of it. we didn't want someone to come in and not of their heads at us and so my father was a very valuable. the message which ago we was
going to be tough but it is doable. they're still on and off switch. i can't turn off and say it's gone after being around for decades. it's great to card work and on the banks part and federal reserve part so we deal with the tools to tackle it and ended in a meaningful way and one rating agency is a possible downgrade of some of the large institutions so to bomb but they've got in the past from dhaka government support such as a positive sign suite of tools to in did and overtime willing to. >> in terms of the orderly liquidation of authority some have knocked it saying that it prioritizes the systemic risk over property rights how you reconcile that? >> i don't understand -- >> our priority claims is what you have in bankruptcy. of the things that we can do
that you can't do an bankruptcy as we can preplanned and the institutions on the ongoing basis collecting information. we can plan and work with international regulations and regulators and a dance to navigate with a further requirements might be for the facilitating an international resolution and with smaller banks already. bankers can't do that. the editing they can't do is they can't provide a temporary liquidity report is where some of it quote on quote bailout comes from. but with the financial the institutions if you need to reserve the franchise value you do need to provide some ongoing liquidity support to keep it operational as it is sold off. so, those are the things that are different and better in bankruptcy and we can require the performance and derivatives which is a huge problem and i hope the congress will get in the bankruptcy process owls well. but in terms of how creditors are treated similar to
bankruptcy. actually i think creditors will come out better in the process because we have the ability to maintain the franchise it just doesn't fall apart and when the filing occurs as use of the lehman brothers process, so i think in that sense it will help creditors but it remains the same and we follow or tried to implementing the overly to look to the bankruptcy credit as much as possible. >> it is going to be a rules based on wind. >> will be transferred. there will be lots of reports to congress, and yes it will be faster, too and much with attorneys' fees and other types of the administrative expenses. >> it will be rules based on monday it will be public and you will set the standards >> and will be competitive to the house we deal with banks now and advanced marketing process which are to get as many bids as
possible one of the key parts of the living processes to make sure the business lines are in line with the legal entities so they can't be broken up into the market segments and sold in a prominent manner. our processes to didn't the private-sector. we don't like sitting it bridges and running them indefinitely so that's having that pre-planning is important and some may need to do organizational changes to simplify with the business lines so they can be broken up and sold off if they get into trouble. >> when i speak to my small business owners because they are talking to the banker and they've had a relationship, they may have good cash flow, they may be profitable and the banker says the regulators won't let us land having met with you and i had this meeting six months ago and respond to this and you know, talk to a small business
person who's trying to keep things going and the banker is telling them it's a regulator and the regulators as each bank is different, who is speaking the truth here? >> we have strongly encouraged banks to make small-business loans and especially the small banks have a big presence in this area and we want them to make the loans. fighting sometimes the regulators are blamed. maybe the bank is feeling a little too risky but if you're the customer relationships a the regulator making them do it as opposed to saying they don't think it's a good credit risk. we set up a hotline for small business for consumers now we have outlined for small businesses with a field do not divide credit they can call us and to fix the bank and refer to another regulator if it's not our banking and that has been helpful as educational for us to see the kind of complaints coming and it's been helpful to the small businesses as well to
understand with the assimilation process these are to do and perhaps reach them to do. >> part of the problem here is that the economy is on certain and making small business borrowers cautious and banks cautious and given the economy on the sound footing i think i cannot overestimate that's what's going to curious and that is what is going to push banks and in the government programs to provide the small business lending are good but it's going to get the economy going again in a more robust rate. >> what i'm hearing from you today is some concern about the transparency of derivative transactions and the approach >> transparency is extremely important. i would put the top of my list of things a lot of transparency could help. i think a lot of the reasons
that occurred in the market wouldn't have occurred if the regulators and certainly the market in general had a better picture of who was taking what positions and what price. so i think that's very important. and the derivative is going to take a while. the market developed for a long time without any kind of regulatory overly and so i think it's as i've said before and a graduate with a problem makes sense. i think also in terms of the promise during the crisis and the derivatives bunched together of markets that was a big driver in the crisis and perhaps particular attention to that segment. >> okay. and the second thing you mentioned is this cost-benefit analysis and the cost of the totality of the financial regulations and rulemaking coming out of dodd-frank. >> the relationships with of the
rules and the a cumulative impact i think that is good. i think we each have been going at this, but there would be a good structure project. >> okay. thank you. thank you for the testimony and because we have the votes on the house floor members have departed and took the liberty to ask a few questions before i depart but think you for your service to the american people. you chaired the fdic with what would seem like a pretty reasonable time when you took your first term, and we know that you're very active and in the financial crisis trying to make sure the cooler heads prevailed, and to really preserve the insurance fund that you're in charge of and we really appreciate that and i don't think that we will fully understand the impact you have or the role you played for many
years and unless you are writing a book -- >> very good. i hope i hold up. thank you, mr. chairman. i'm sorry we didn't have more chance to work together but i've enjoyed this opportunity and wish you all the best. >> thank you for door service. before the meeting is adjourned members have seven legislative days to submit questions for the record and with that this hearing is now adjourned. >> [inaudible conversations]
held the first in a series of hearings examining the u.s. manufacturing industry and looking at ways to improve future growth in the sector. witnesses included national association of manufacturers president and chief economist marks sandy. among the proposals reducing uncertainty within the corporate tax structure as well as limiting legal costs, energy prices and industry regulations. this is just under two hours. >> the committee will come to order. this morning we are going to go in a order that we normally don't have which is statements after the first two witnesses. we are really honored today to have senator stabenow and congressman bass and we will start with senator stabenow and i will do an introduction of both of our first witnesses. senator stabenow was the chair of the senate agricultural nutrition and forestry committee and was also a member of the senate energy committee, the finance committee and the budget
committee. she serves also as the co-chair of the bipartisan senate manufacturing caucus, and she was appointed to the president's export council by both president bush and president obama. she has sponsored many initiatives to revitalize our manufacturing sector including the retooling loan program for advanced rent factors this is bringing jobs back to the united states, and also i want to make sure that i mentioned she represents the state of michigan, and i know she's very proud of that. and i know has a new senator she was here a number of years ahead of me. she was a mentor to the new senators and continued to serve in that capacity. we are grateful that you are here with us this morning. i'd also like to welcome their representative charles bass from the second congressional district representative bass has permitted a clean alternative energy and serves on the house energy and commerce committee.
prior to being elected to congress in 2010 representative bass served on the board of the managers at new england and one of the leading producers of the cleaner-burning wood pallets. representative bass previously held the same seat in congress from 1995 until 2007. let's start with senator stabenow and we are grateful that the senator and congressman are with us today. >> thank you, so much german casey and vice chairman brady. it's wonderful to be with you a bible to thank you for recognizing the importance of manufacturers in this country and having this hearing. it's a very important hearing and i very much appreciate our friendship and working relationship and how you fight for pennsylvania but i very much appreciate as the chair and vice chair that you are both focused and i know on manufacturing in
this country so thank you. >> we invested a this is a critical issue for us is as it is for your state. to have a middle class in this country i believe we need to make things and growth things and if we make things. growth things here the jobs are here so that's pretty fundamental philosophy that operate under and i think it's one that makes sense for us. we are proud of michigan in the last century to be the heart of american manufacturing, and rightfully proud of our role and creating the proud middle class of this country. but for too long we have seen a situation where the companies are actually competing against countries right now. that's really what's happening. it first started with japan and there are huge and advancements in the battery manufacturing that and allowed their automobile company to be able to move more quickly in terms of
hybrids and electric vehicles because they were finding that and investing in that and their government was doing that. but renouncing china, we all know there are thousands of different challenges of and china, but india has a manufacturing strategy. germany, a very different economy, has a manufacturing strategy. all of which they are aiming to compete with us because they want what we have had, robust middle class and a strong economy for the majority of their citizens. in the years between 1979 to 2009, the united states unfortunately lost more than 8 million manufacturing jobs and michigan alone has lost more than 300,000 manufacturing jobs just in the last ten years. during that time, countries like china have been investing heavily in emerging technologies and frankly if they don't create if they will steal it from us
they don't seem to understand the patent law and we have a number of different challenges as we know, and as we work in the global economy. but certainly than focusing on renewable energy and we all have been watching that happen. the next two years alone china will invest almost $15 billion in advanced battery technology to compete with us. japan paid as i said for almost all the initial research to create the batteries for their vehicles and last year china invested over $20 million in solar industries and the solar industry. part of china's manufacturing strategy as we indicated this stealing intellectual property and putting up barriers to the american manufacturers which is part of for 20 to address in terms of fair trade, the ability to have doors opened and to have the rules applied on both sides of the door and the trade barriers are very important for
us. we need to hold china accountable and devote additional resources to the trade enforcement and we certainly a number of bills senator gramm and i have introduced and others have joined us to be able to address that as well. but we also have to make strategic investments in clean energy technology. president obama challenge just to put 1 million electric cars on the road by 2015. we all realize that by investing in electric vehicle innovation we can create jobs in america and frankly get us off foreign oil and address other issues including national security. so, i would urge that as we look at the pattern for what we have done in just a short time in the last two years we have invested $2 billion in the recovery act and advanced batteries innovation and manufacturing. that unleashed tens of billions in private investment. while other countries in the world are investing much more we
found by public-private partnerships working together we are seeing new jobs and industries developed. by 2015 we will have the capacity coming from 2% of the world's advanced battery manufacturing and the capacity to produce 40% of the world's battery technology because of the public investment unleashed to work with the private-sector. since 2010 in january we created nearly a quarter of a million manufacturing jobs and that's the first increase in medicaid. why? because we've begun to do if you things. and i see as my time is coming to a close i would just briefly say that we have done a number of things focusing on clean energy both advanced clean energy loans that we've done to make sure capital is available, you mentioned the retooling loans mr. chairman that we did on the energy bill in 2007 that is actually allowed in number of
companies i will mention one great company in michigan ford motor that we told a large truck plant to bring back the small vehicles, the fourth focus electric and other ford focus focus of the adoptions. they are bringing jobs back from mexico related to the production because we partnered with them to retool plants. some of its battery innovation, retooling the plant, the advanced mind attracting tax credit with 48c we are in a situation where we are beginning to see some changes because we are investing because the lehman veteran tax credit we have on the books right now is 30% credit for this equipment and buildings the past two years ago called 48c and i would strongly include -- conclude by saying we should strongly invest in those things that have begun to work. we are seeing more companies,
the advanced manufacturing tax credit has enabled companies in 43 states to be about to open and expand into new kinds of technologies and let me just say one final thing and that is why all china has five or ten your plans, our policies are too unpredictable. we do things a year at a time if we are lucky. other countries are looking at five years, ten years or longer. for the private sector to have the confidence to invest, and these are major investments, to create jobs we needed longer-term policies, innovation, fair trade, longer-term policies akaka and i truly believe if we make the right investments partner in together at the global economy where every single company is competing against countries right now. and we reinvigorate and create an advanced manufacturing
economy that is critical for us as we move forward and have a strong the middle class in this country thank you very much. >> senator stabenow, thank you very much. i should have mentioned the beginning that your statement, a full statement will be made part of the record and congressman bass? >> thank you very much mr. chairman of like i said to be part of the record and i appreciate the opportunity to testify before the committee today. my home state of new hampshire is a and actual example of the state for the diverse economy in the manufacturing sector. we have low unemployment, less than 5%, 4.7% last statistics we have a highly educated, highly skilled workforce and lower tax rate than 49 other states in america. we of small government and an economy that benefits from those factors and i hope my perspective both as a manufacturer and as a
representative steve can be useful in this discussion. we have large employers employing more than 5,000 people in the defense industry and 11% of the total output of our economy directly associated with manufacturing but it hasn't always been that way or put it this way the output hasn't been the same. bye ancestors studied the the cassette olden there were farmers and they grew flaps, it was a miserable existence. their children built the cynics mel in new hampshire which is a manufacturer, textile manufacturer and started making clothing for the next 200 years the economy evolves in the state as a manufacturing economy and textiles and shoes. in the 50's dillinger was one of the leading defense contractors in the country. in the early to late 90's new hampshire was number two in the
nation for high-tech employees and now where are we today? as senator stabenow so articulately discussed we are hoping to be able to lead the way in the development of technologies in the area of alternative energy and it is one of my passions in shall we say my new life in the u.s. congress. all in all, we survived because we have a environment where we treat the a devotee for manufacturers to thrive in a garment that's part of turnover, to the inertia and the leaves capitalism is not a dirty word where the need for a safe workplace for good environmental controls and good access to products make sure they are what they're supposed to be where that is balanced for the need not to tie down the business community to the extent they are spending on necessary sums of money and labor they're trying to meet regulations are not necessarily in the best interest of anybody.
all i ran for congress in 1994 because the tipping point in my company i went to the xerox machine one day this was in 1994 and this enormous placard over the machine was xerox maintenance guide of their chapter after chapter about how i needed to do this or that in order to copy paper because the toner that was in their harmony forever and i'd been using this machine for ten years i felt fine. we have to put that up there now. it's part of a rules you have to read it and we have to tell you about something is wrong here. something is wrong. the on demand affecting facility that was in full compliance with osha, then mosha appeared to be it was in a state that starts with them. mosha's regulations were different than osha regulations, so we didn't know which set of
regulations in the factory we were supposed, because if we followed mosha would be in compliance with osha and vice versa it was complexing. this wasn't good for manufacturing in america. now i am in favor of anybody of a safe workplace. we have to apply a level of cost-benefit the interrelationship to the government manufacturers. like many here i watched occasionally show on tv there is 1i recalled how it's made and to get by the op noxious music it's quite extraordinary the sophistication we have a manufacturing and every one of those little shows is about american manufacturing and how diverse we can be difficult to to keep tax rates competitive globally and african balance regulations so that the consumers and public and working americans are safe yet we can compete with other manufacturers around the world we will stay
ahead of china. we are well-educated like 10-1 more productive on the per capita basis than chinese workers, but we need to have a good competitive workplace and be able to trade and be able to continue to have a well-educated work force. we don't need the government to tell us how to succeed in manufacturing. i've done it and i did it without any help from the u.s. government. thank you very much. >> ,, thank you very much. as is often the case when members of the house and senate testify we usually don't go on and questioning because i know you're busy, but thomas congressman braley, the vice chair, has questions we just wanted to thank you for your testimony and i will speak for myself and submit them but i know you have places to get to. vice chairman brady? >> i want to thank you for holding this hearing and then to for this testimony and to
survive this economy and keep a very strong important part of the sector manufacturing moving forward and i would jacinta for being here and leading off this hearing. i will begin my opening so we can keep things moving in the right direction. i want to thank everyone for being here to discuss a critically important issue in manufacturing in the united states of america and the subtitle is why we need a national manufacturing strategy but i am pleased to hold this hearing today along with vice chairman brady to discuss the critical role that manufacturing plays in the united states economy and the actions the congress can take to strengthen and revitalize the manufacturing sector. for decades manufacturing has been a pathway to the middle
class for millions and millions of american families. we made world class products over many years with a writ was steel or cars or clothes or furniture and people who need these products were paid good wages with good solid benefits at the same time. in the past three decades more and more of these jobs have moved overseas to developing countries with abundance supplies of cheap labor. the unfortunate reality is that our trade policies have failed to protect workers from unfair trade practices such as currency manipulation, loose enforcement of intellectual property rights and the lax environmental protection and other countries. when we lose these jobs overseas of course we lose jobs which we need, and we also jeopardize u.s. leadership and research and
development as well as innovation which created the opportunity in the first place. the number still worrisome sorry. and if a tree and plant peaked in the united states in 1979 and 19.6 million workers. today we are down to 11.7 million people employed in manufacturing. again, that's 19th .6 to the 11.7. a decline of 40% just in those a few short years. the last ten years have been extremely tough for u.s. manufacturing overall. from january of 01 until may of 2011 this past month, the united states lost 5.4 million manufacturing jobs just in those ten years. including 285 in my home state of pennsylvania. in those same ten years. most of these losses occurred
between february of 01 and february 094.6 million u.s. manufacturing jobs disappeared in just that eighth year period. in the past year and a half, manufacturing as a sector has gained strength. that's a little bit of good news and jobs lost in the previous decades since the end of 2009 manufacturing has added 250,000 jobs. important progress to be sure but we need to do a lot more. in the years and months ahead. this hearing is about how we build on the recent progress and laid the groundwork for future growth in manufacturing. it's clear we need to take actions that have both an immediate and the long-term benefits. just over the horizon. the starting point should be in national manufacturing strategy, not just a set of policies here
and there but a real strategy. while other countries including germany, india, china and japan have marshalled their resources and leave out a strategy the united states has stood silent. the u.s. needs a development or i should say needs to develop a comprehensive national manufacturing strategy built from the input of small and large businesses. leiber and other key stakeholders in this strategy. it must be updated regularly and it must ensure that we are responding to new challenges and seizing new opportunities. this will allow us to effectively coordinate resources and maximize effort. but there's other steps we can take as we discussed at our economic hearing on the life sciences industry we should make permanent the research and to submit tax credit to give companies the certainty that the need to make long-term r&d
investment in the u.s. and china's currency manipulation and other trade practices so that american companies and workers have a fair shot. the undervaluation of provides a significant subsidy as much as 40% to china's exports as if in a 100-yard dash you give your opponent your competitor a 40-hour head start. it wouldn't be fair in that instance and we shouldn't what the chinese get away with a 40% had a start in currency. currency manipulation is costing the workers' jobs and needs to be stopped we need to stop talking about it and do something about it. we must extend the trade adjustment assistance to help workers who lost their jobs based on unfair foreign competition, and we need to find new strategies to increase
employment. in pennsylvania alone almost 24,000 people received the help of the taa parts. taa strength is this a few protections for workers and aids to be extended before we consider any trade agreements with south korea, colombia and panama. earlier this week reintroduced legislation to extend trade adjustment assistance for five years and we need it. we must continue to invest in science, technology and engineering at malcolm so-called stem disciplines. each of which i should say in all are very important to the education system so that our young people are prepared for the high skilled and high-paying jobs of the future. cities are a few of the concrete steps we can and should take. manufacturing is the heart and soul of our economy. still even with all of the losses the heart and soul of our
economy. even the manufacturing a point and has declined significantly since the 1970's the u.s. car remains the world's manufacturing leader producing 1/5 of manufactured products worldwide. as a nation we haven't done enough to support and protect our excellent manufacturing companies and workers. it's time for that to change. and changing means charting a new manufacturing strategy which will strengthen our economy and help create new jobs and new opportunities. and i believe that hearings like today can build a consensus, bipartisan we saw that today in the first panel in the democratic senator and republican house member we can build that consensus on the core elements of a comprehensive strategy to support manufacturing and strengthen our middleclass. today's hearing is the first in a series of hearings that the joint economic committee will
hold to determine the best strategies for revitalizing manufacturing and rebuilding that base. we are fortunate today to have with us a distinguished panel of experts who bring with them deep knowledge of manufacturing and a valuable perspective on the steps we can take to reenergize the vibrant sector and this vibrant sector of the american economy. as we look forward to the panel testimony today. we are grateful for the testimony. i will be introducing panel members of the moment, but i wanted to hear as well from our vice chairman brady and we are grateful the hearing he cheered yesterday on the house side and especially grateful that he made the journey over to the capitol today and we are grateful for his opening statement. >> and place. thank you, chairman, again for calling on this important topic and i appreciate the distinguished panel been here as well. the sector has changed dramatically over the last several decades.
manufacturing productivity and the america has soared. what took 1,000 workers to produce 1950 now only takes 184. to the u.s. manufacturers produce two-thirds of what the country consumes down from 80% three decades ago. the goods as we were manufactured here now the 1960's when directors made 98% of america's but today it's the opposite. 90% of those are brought in. during the same time the newman detector industry's have arisen america such as the computer chips. the food, computers and electronics, fabricated metal products and machinery are the top five minutes after products in america. while technology and productivity has shrunk the american manufacturing workforce manufacturing remains an important part of our economy u.s. manufacturers produce about 12.5% of the gross domestic product and employ about 9% of
the workers that translates into 12 million manufacturing jobs and nearly 7 million related jobs many of them in small business. but transitioning the high-value products, america leads the world and in this sector and outputs. and the largest manufacturing economy producing 21% of the global manufacturer of products. china is second 15%, japan offered at 12. it's quickly becoming the top spot. manufacturing goods account for more than half of america sells to other countries. we rank third in the world's manufacturing exporter following the european union and china. today's america's economic recovery struggles. regional indicators suggest manufacturing growth has recently stalled in many parts of the country. in light of these dramatic changes the issue at this hearing is whether the congress should adopt an industrial policy for manufacturing under the modest fabric of the national manufacturing strategy
to timely question. my concern is often well intentioned and industrial policy can morph into a form of central planning which requires the replacement of the invisible hand of the free-market with the visible hand of the government. it driven by the understandable, but too often misguided political considerations and buttressed with incomplete data and outdated perceptions it can result in the undesirable rent seeking corporate cronyism and economic stagnation. in the countries around the world industrial policy has repeatedly failed. fostering the new product technology, old firms and declining industries inevitably capture industry policy protection for the consumer and ultimately economic growth. as president ronald reagan observed the view of business if it moves taxes and keeps moving regularly. if it stops moving, subsidized. president carter chairman of the council of economic advisers charles schulz observed one does not have to be a city.
to forecast the surest way to multiplied unwarranted subsidies and protections measures is the legitimize our existence under the rubric of the industrial policy. the outcome of the industrial policy encompass some elements of both protecting the losers and the winners is that the losers would back the subsidies for the winners and return for the latter support on issues of protections. as we listen to testimony today from the distinguished lawmakers economists and business leaders, my thought is that instead of the in centric industrial manufacturing policy, the congress should instead adopt pro-growth economic policies to reduce the competitiveness and opportunity for all economic growth in the country. one, to ensure business is to not their higher cost congress should adopt a plan to reduce federal spending relative to the size of the economy. and reform on the entitlement programs to make them sustainably solvent and gradually to bring the federal government back in the balance. never to come increase
competitiveness around the globe congress should perform the corporate tax system. the united states is the second-highest income tax rate in the world. congress should reduce the after-tax cost of investment by spending most equipment and shortening the schedules for building. congress should move to the territorial tax system and until then congress should act now to allow the u.s. corporations to repatriate stranded american process to invest in the new jobs, research investment and financial stability here at home. freakin' find customers for american manufacturers farmers and service companies, congress should immediately improve the three outstanding trade agreements with colombia, panama, south korea and seek more opportunities to open an open to the coke markets and for the readers unit costs and keep american companies located in america the congress should repeal the laws the drive up costs such as the new national health care law and on necessary federal regulation. to help the estimated 18% cost of the damage for the u.s.
manufacturers compared to the global competitors the congress should act now to modernize the patent system and reform the tort system to produce those excessive policies and frivolous lawsuits. i believe adopting these economic policy changes would benefit u.s. manufacturers. their customers, their suppliers and workers far more than the national manufacturing strategy. final point, lawmakers and policy makers need much better information on trade. on production networks and global supply chains the better reflect the in the sector in the marketplace of today. for example, the traditional st. statistics field account for the trade in value as a month to more countries. the bureau of labor statistics contradict jobs gained or lost in the local pub but can identify the gain or loss from trade. we are using eight track's terri hail statistics and the ipod world that don't reflect the activity or change occurring in this fast-growing global
marketplace. an accurate, timely and real-world data is a bipartisan goals are you convinced we can all work together towards. i look forward to hearing today's witnesses, and again, thank chairman casey for holding this important series of hearings. >> mr. chairman, thank you very much. unless there are other statements from the members, we can move to introduce each of the witnesses and then go one by one. let me start on the audience right and left on the panel here with dr. mark zandi. the chief economist of moody's and analytics where he directs the company's research and consulting services to businesses, government and other institutions. dr. zandi's research includes macroeconomics, financial and regional economics. in addition he conducts regular briefings on the economy. he's frequently quoted in the national and global news outlets. dr. zandi received his ph.d. at
i'm glad i mentioned both institutions. research asap and is the president and ceo of the national association of manufacturers of aam come the largest manufacturer trade association in the united states, represented on march 90 actuaries and every industrial sector. he became the national association of manufacturers president in 2011, january. mr. sub 10 is leading advocate for nearly 12 million americans employed directly manufacture, educated in the public policy and critical texture of the u.s. economy. previously has served as chief of staff to a congressman, governor and also senator from virginia from 1991 c. 2002. mr. timmons graduated from ohio state university. welcome.
and finally, scott paul. scott paul is the benedict negative director of the alliance were -- alliance for american manufacturing which was launched in april of 2007 at aam is a nonpartisan, nonprofit partnership established by some of america's leading manufacturers in the united fieldworkers to explore common solutions county public policy and job creation infrastructure investments, international trade and global competitiveness. mr. paul served as a staff member to the great representative jim jones and the state of indiana is a former representative. as a chief foreign policy trade advisory to house democratic whip david winer from the state of michigan. mr. potter and a ba in foreign service from national politics.
he's mentioned as well -- as was an m.a. from georgetown university school foreign service. mr. paul, what berkeley are here. we'll start with that or zandi and the electorate. >> thank you, senator casey encompassing 3-d for the opportunity to be here today. panoply of the mideast organization and these are my views and expressing today. just so you know i'm not in a tech come i did start my own company in a good-sized business organization about five years ago. is remarks. , manufacturing and vital role in our economy, in the business cycle and the economy more broadly and that is clearly in the current economic recovery. manufacturing has been key to the growth we've experienced over the past two years.
the economic recovery is now two years old. just give you a few statistics, in terms of out that gdp by manufacturing has accounted for over half of gross and gdp in the past two years. in terms of wages and salaries, it's about one fifth of the gross. in terms of jobs, one tent. although, many of the temporary help chart created in recovery are also very on their factory floors. the contribution is even greater than that. one other issue standpoint. manufacturing's contribution to this recovery, at least so far has been greater in any other economic recovery since world war ii. so this is very important to our current economic prospects in terms of job creation and growth output. manufacturing school in the economy also is key for a number
of other reasons. it is very important to middle-income america. there are no better jobs for middle-class americans and manufacturing. just to get a few more statistics, the average wage and salary per employee across the economy is just under $50,000 a year. that's the average across all industries and occupation. the average and manufacturing is over $50,000 a year. just for context, the highest teen industry is in my name from an $80,000 a year. the lowest is in leisure and hospitality industry, just every $20,000 a year. manufacturing jobs are very, very important to supporting middle-income households. we need the shots to help support the middle-class. it's also important to recognize manufacturers will in many small communities across the country in more rural areas, what i
would call cause i pervade areas, particularly from pennsylvania all the way across the country to ohio, indiana, illinois, iowa, wisconsin and then from michigan in the north of the way down to alabama and georgia. that region is very dependent and these are are small, not very diverse, not a lot going on. these folks lose jobs in these communities are stuck in a sense and are under water in their homes and it's very difficult to move. i think it is important to the communities in this part of the country to revive and support manufacturing because this is the key to their economic well-being. i should say going back to recovery, gross and these economies has been quite strong. this is where a lot of the economic growth has been over the past two years.
finally, one other point about the role of manufacturing. it is vital to innovation and productivity growth. this is the fountain of our growth in living standards. manufacturing productivity growth has been about 3% over the past decade compared to 2% and the rest of the economy. more importantly, a lot of what is produced goes to supporting productivity growth and the rest of the economy. for example, my business is economic consulting. i rely on very sophisticated telecommunications equipment and other kinds of computer technology, data processing. and i couldn't do it unless i had a very productive manufacturing base. point number one is manufacturing is very important. point number two and i won't go into any detail. i'm sure with billing q&a, but there are 90 a number of things policymakers can do to help support manufacturing in terms
of opening up global trade. you mentioned the chinese current v. i think that's absolutely vital to address. nothing is more important from a macroeconomic perspective for manufacturing and to get these currencies that are aligned. they are not aligned and that is a significant competitive disadvantage from manufacturers. increasingly other businesses as well. also, policies to limit the cost of doing business, cost of labor, cost of capital, going back to corporate tax reforms, cost of transportation and distribution ghosts were infrastructure, which is sorely lacking. finally, the cost of energy. manufacturers are very energy intensive industries and we need to focus on trying to provide lower-cost energy sources, for example, natural gas resources clearly in many parts of the country and is quite cheap and can feel and manufacturing long into the future.
so i'd be very happy to discuss a range of policy options with regard to other things, but i think you have an important role in supporting the manufacturing-based vital to our long-term economic future. thank you. >> i should've mentioned her full testimony will be part of the record. that is the case of oliver witnesses in your very close to the five-minute mark and that's good. mr. brill. >> thank you, chairman casey, vice chairman brady, other members of the committee for the opportunity to discuss the manufacturing sector. my perspectives on sound fiscal policy is to promote fundamental long-run economic growth. i like to stress two points in iraq this morning. first, manufacturing unemployment is and has been in decline, productivity growth is robust. second, policymakers should seek to establish broad economic policies that permit the u.s. economy to evolve this market forces to date and not pursue narrow industries specific in
our policies. manufacturing, a wide range of injuries including semiconductors and fruit production has long been a significant driver of economic growth in the united states and abroad. total manufacturing output declined during the recession and has yet to fully recover, but true to its reputation for economic growth, productivity -- manufacturing labor per unit increase 4.1% over the last four quarters. manufacturing employment as others have noticed with a particularly hard by the recession. nearly 2 million jobs were lost in the 18 months ending december december 2009. manufacturing employment has been declining in the u.s. since its peak in 1979, even in non-recessionary periods. in light of this, we should not expect a sizable increase in employment in effect for, even if the economy recovers more fully in output increases.
the explanation is productivity growth. while the ability to produce more output with less labor input can reduce employment in manufacturing, such productivity growth is the means by which our standard of living increases. in short, the manufacturing sector today is evolving similarly to the agriculture or a century before. the downward trend in manufacturing employment prompts some to conclude the government should give special assistance to the sect or. this approach in my opinion comes about policies aimed at stirring resources towards one's vector can harm other sect tears as resources are misallocated from one activity to another. the significance and importance of manufacturing the united states economy is undeniable, but critical to recognize manufacturing is but one sector of a large and robust u.s.
economy. the role of policymakers should be the established broad, effective and stable policies that permit the u.s. economy to grow as market forces dictate. given that objective, policymakers should not seek to develop targeted subsidies on narrow economic policies. instead, long-run economic growth should be pursued by improving the u.s. is an environment as a whole, pursuing such structural reforms will benefit the manufacturing sector directly by improving our competitiveness and reducing costs and indirectly encouraging growth across the entire economy and thereby increasing demand. it's important to recognize the myriad distortionary non-neutral policies saturday exist. one clear indication the federal government has taken a special interest in the manufacturing vector and the creation of the commerce department's manufacturing initiative and the establishment of
www.manufacturing.gov, a website from addressing the which i consider to be an oxymoron in a free-market economy. policies that favor manufacturing over other industries go beyond dedicated websites and agency initiatives. one such policy is a specific tax reference. section 199 of the internal revenue code allows for producers of manufactured goods to claim a deduction of approximately equal to three percentage points reduction in income tax rate on such income. one way to reduce the distortion described above and mitigate other important harmful distortions of the corporate income tax system would be to significantly reduce the u.s. corporate tax rates, replacing section 199 with a simple and significant reduction in the corporate rate, perhaps 25% for both level the playing field between manufactured and i
manufacturing production and improve the general competitiveness of all u.s. corporations. corporate tax reform is not the only necessary change. just one critical step that would go a long way towards achieving a more neutral fiscal teeth, which would be the long-term benefit of the manufacturing sector in the economy at large. i believe that we cannot subsidize their way to prosperity, rather we need nonbusiness policy that facilitates a level playing field for all industry and promotes general economic growth. >> thank you, mr. brill. mr. timmins. >> thank you, chairman casey and members of the committee. i appreciate having a chance to speak to you today about manufacturing in the united states because i truly believe in the power of manufacturing, not just for families, but for our country as well. back in the 1930s, my grandfather left the firemen stood in in line for six months at a local manufacturer, waiting
for a job at that facility because he knew then what so many manufacturing know today, the manufacturing job paves the way to the middle class and did so for my family at that time. today i'm president of the national association of manufacturers and as you mentioned, are the largest manufacturing could association and the country may represent 12,000 members of all sizes and where the voice of 12 million americans who work in manufacturing. i think it is safe to say we're all frustrated with the pace of the economic recovery. in fact a recent "washington post" poll found that the majority of americans actually think the recovery has yet to begin. manufacturing can lead to recovery in the months ahead. since the end of 2009, some of our dimension manufactures have created a quarter of a million new jobs and that's about 14% employment growth. that number really pales in comparison to the 2.2 million jobs in manufacturing that were lost or in the recession.
the slightly brighter picture simply cannot be taken for granted. after months of consistent job gains, manufacturers last 5000 jobs in may, so clearly we have a lot of work to do. as the committee considers ways to improve the business climate country, i ask each of you focus on a very basic and fundamental questions. will this policy, whatever policy are deliberating, help your country create jobs and compete successfully in the international marketplace? today at 18% more expensive to manufacture a product in the united states than it is another industrial economies. other countries are racing ahead in adapting progrowth policies and leaving the united states behind. for in income and corporate tax rate. the united states is in the wrong direction as other countries have reduced rates, the united states is standing still. we currently have the second highest tax rate in the world behind japan, which recently the
latest cut that would've pushed the united states into the number one position at another concern is regulatory burden. onerous regulations stifle jobs and economic growth. they are chilling dollars plus weight on job creators. some are straight. colombia, panama panama free-trade agreements for four years. "the wall street journal" recently reported colombia is looking to increase trade ties with china coming of uniquely met with the u.s. is the deal was not within any and yet they're the colombia trade minister said columbia can no longer sits with his arms crossed waiting for the united states to act. this trade agreement will enhance manufacturers significant marketing colombia. manufacturers and we are waiting for action and we can't allow these barriers to growth and jobs continue to stampeders 120 other free-trade agreements being negotiated around the world, but the u.s. is only party to one of those. or see their market share to
competitors. there are so many other policies that are causing us to stand still, but also policies actually turning the clock back, permitting is time-consuming and discourages additional investment. excessive regulations continue to mount. for example, the environment protection regencies with the rules on the books, communities across the nation would suddenly be in violation of the clean air act. many manufacturers have to put their plans to expand or modernize on hold. according to a study by the manufacturing alliance, new rules could cost as many as 7.3 million jobs by 2020 and add up to 1.1 trillion regulatory costs in between 2020 and 2030s to competitors andrew hasbun history and economy job creators this way. they're actually looking for ways to take economic leadership away from us and we ought not to be an unintentional help in
doing so. mr. chairman, i can't recall his ever met an american who complains a country manufactures too much. support manufacturing transcends ideology party lines as we see here today. we've got to take that broad support and turn it into action. whatever policy of congress and the administration ultimately decided to adapt, they should be designed with a specific purpose of making the united states the best place in the world to innovate, manufacturing the business. i've outlined a number of specific policy proposals in my written testimony that invite you all to reveal is the american manufactures therein mentioned stability, in addition resourcefulness. many action is poised for win is a that can lead to a economic recovery in our government simply must enable that to happen. thank you so much. >> thank you, mr. timmins. mr. paul. >> thank you, chairman casey members of the committee.
onto thank you for inviting me to testify on behalf of the alliance for american manufacturing and i first asked permission supplemental materials in the record. >> will be concluded. >> aam is leading many factors in our largest one goal of strengthening manufacturing and therefore our nation's economic and national security in an increasingly enhanced partisan climate, we believe labor management approach can help identify appropriate avenues for cooperation. i will say the idea of a manufacturing strategy is hardly a radical concept in a robust strategy has been at the core of american economic policy for all but a few brief periods of our history. today's public policy to boost manufacturing is the exception, not the rule de novo a back to them and others. indeed, alexander hamilton constructed america's first industrial policy. i encourage you to read it. policies continued until the end of world war ii. globalization economic
approaches with imports and domestic consumption of her exploits have helped to steadily erode manufacturing as a percentage of gdp, private sector employment and other key measures. the other idea is also not a partisan one. president reagan spurred on by democratic congress adopted a flurry of measures to counter a trade relationship with europe and japan in the 1980s. the plaza accords, which reads the value of currency in japan and europe relative to the dollar in a managed way had a positive effect in lowering our current account balance over time. key government investment under the reagan administration in the semiconductor industry and other technologies spurred development and commercialization. president reagan signed reagan signed into enhanced by america requirements for certain infrastructure projects to boost domestic employment. more recently, president of him in congress were to provide loans and breeding space for a
domestic auto industry, which they needed to rebuild. the author wasn't perfect, but it was a necessary step to stabilize one of the support structures for manufacturing. as important as the step was, it was an emergency strategy and not a long-term effort to grow manufacturing jobs. the case for a permanent manufacturing strategy could not be stronger when one considers no matter how innovative or competitive individual manufacturers may be, there are problems that can play cannot be solved on their own as recently articulated by jerry bernstein at the center on budget policy priorities. for instance, research and development can be expensive and hard to capture profits. for instance, advanced batteries. no single from the possibly coordinate national projects like the smart grid for the internet. from softening assistance in applying academic innovations to the production is. manufacturers often face bears to accessing credit for entry expansion and innovation in
manufacturers need assistance in exporting as well as push back against unfair trade practices. we need a robust manufacturing strategy because the feet of the industrial site are is too important to be left to a gaggle of competing ultimately unsatisfying theories of why it has been declining. the decline of manufacturing is not inevitable, desirable, nor explained through series of capitalism, advances in productivity and technology, high regulatory tax and compensation costs for inefficiency. for instance, let's look at germany. german publishers of the manufacturing output and exports have held steady over the past decade while americans have declined in china's have risen sharply. yet germany is not a low-cost country to manufacturing. average manufactured in germany $40 an hour in the united states is 32. germany has an integrated strategy for boosting manufacturing focused on skills,
technology, investment, demand-side incentives, business collaboration, aggressive trade these, which allow to successfully compete. germany is a world leader in advanced manufacturing a solar panel production because it wants to be an all stakeholders work together to make it successful. how does germany have a balanced trade relationship with china when the u.s. spends monthly trade deficits more than 20 billion? because it matters in germany more than it does here. what does america need to do to create for manufacturing jobs? i'll summarize recommendations included in my written testimony. first, we have to deal with chinese currency manipulation. dealing with this manipulation would have a far more reaching impact and passing any individual free trade agreement. benefits to gdp to employment and deficit reductions would be extraordinary. second, we need to counter china's indigenous innovation, whether the industrial subsidies in enterprises is rare minerals
export restrictions and read that intellectual property. the simple truth is when we act, when they stand up and enforce trade laws, we get results and hope in companies across our nation, including those in pennsylvania and texas. second, we should restore the obama administration's expert initiative to focus on is your trade deficit rather than merely increasing our inquiries. we should also make positive tax changes. xander stabenow outlined these as well as a number of members from the dais here, including accelerated depreciation. what we don't want to do is off a corporate tax rate reduction with reductions in deductions for manufacturing. person you estimated such an approach could stop manufacturers with the $40 billion bill and be a windfall for wall street. fit, while we should eliminate duplicate of regulations, winning a boost to the bottom of something the united states
doesn't want to engage in. we need to invest in infrastructure and establish a national infrastructure bank. finally, we need a skilled in training infrastructure far more advanced than it is today. were simply find far behind. >> you're under 10 minutes. that's impressive. were grateful for that. book by order of appearance and not get that list the members of the committee know when their term comes out. if you don't mind if you take your breath for two seconds, and what to start with you. i was glad he walked through recommendations because today we get a sense from everyone who has spoken from a microphone, with all diagnose the problem. there's certainly more analysis
and diagnosis we could do. i think it's time for all of us to move to the list of ways to improve this picture in manufacturing. i'm glad she went through some of your recommendations and ask other witnesses as well. one of the points you made and are able to make part of it, but i was noting in your testimony when you start a page that i'm quoting pass legislation and firms to seek relief from the effects of currency manipulation by china and other countries use their existing trade laws. later in the paragraph, you say america would see a significant boost in gdp opp or 1.9%. 2.25 million more jobs and
deficit reduction. and by doing what? sorry, let me turn the microphone on here. a number of economists.dear zandi mentioned. on greenspan mentioned last week china's currency manipulation is one of the most harmful policies out there preventing manufacturing growth in industrialized countries it affects countries like brazil as well, but it contributes to global imbalances and hot money flows and it becomes a vicious cycle that is hard to get out of. i boast a 50 year ago, china announced they would take it off with pay and it has appreciated, although arguably not nearly
enough and it still remains, as you indicated, grossly undervalued, somewhere between 30% and 40%. we have tools have been trade does you can deploy, that we have deployed on subsidies, that we have deployed against dumping, that with a couple tweaks we can apply to currency manipulation and it can certainly produce results, but would at least give our industry, workers a tool in the trade laws that they don't have currently to deal with the unfair currency manipulation from china. i mean, a desirable approach not be candid about this, would be for the administration to negotiate with china in a matter similar to the plaza accords. i haven't seen willingness and i think we need to see congress stepped up to the plate. the bipartisan legislation passed representatives overwhelmingly last year. there weren't any bills they subtracted 99 republicans
>> i'm glad you focus on that. i think it's critically important. the important point is i think sometimes people here folks like us in washington talk about china currency. i guess it will sound like a congressional complaint and pointing a finger at a country, but the reality is just as you can so many others have stated, this is -- if it is not the key thing we've got to do, it's in the top two or three. the evidence is irrefutable. and as you noted, there is bipartisan support. one of the most things you said is as much as i and many others are working on new legislation, we can do a lot right now. the treasury department can do more, commerce department can do more. this administration can do a lot more to aggressively enforce existing law. again, let me say for the record in your testimony. and you referred to the economic
policy. china appreciated their current fee at a market base level over the next two years, america would see a gdp increase of 1.9%, 2.25 million jobs and thursday, a $71 billion deficit reduction. but say they are wrong by a little bit. if we got a fraction of that from one policy, it would be dramatically significant. so what get to more questions about face and other recommendations from our other three witnesses. i wanted to make that point. and i have time on this round, but i'll turn to vice chairman brady. >> thank you, mr. chairman. >> thank you, chairman. i do think of america's manufacturing policy is going to be blame china, manufacturing challenges will be his only mistaken. it is one in a plethora of
challenges facing american manufacturing, many years who are home-grown. that's what i think this hearing has already revealed. i appreciate germany's leadership. you mentioned germany's leadership during the global financial crisis. it is the leader to encourage countries to wind down the fiscal stimulus and begin to get financial house in order, of course america was the outlier. which we of the summer closely to that. i am not a fan of the stimulus. we spent $807 billion. we should have 1.5 million workers here at state and when all that stimulus, we are on factory orders down, consumer confidence receded to its .6 months ago. manufacturing is struggling and forever a key reserve board regions. unemployment -- they spent all of that money to be 6.5% this
quarter. long-term unemployment is at near record highs. the stimulus missed my view by a mile. now we have 13.5 million people still without jobs. so i disagree with the assessment that stimulus has succeeded. my question i guess to begin with, mr. timmins, manufacturing members, are your members clamoring for another job spilled out of washington? or are they anxious for washington to get out of the way of his recovery, to reduce the cost and regulations and barriers that would allow them to make the private business investment that allows jobs to be created? what would there be? >> i think if you enact legislation that reduces costs and barriers and in effect that is a jobs bill is imaged in my
testimony, 18% more expensive to manufacture in this country than another industrialized nation and that's when you take up the cost of labor. that's a very important distinction. that includes several pairs, but the majority of the cost is related to our tax burden, energy costs, regulatory burden and tort written. we have the capacity here in this country to reduce many of those costs and barriers on her own. you mentioned that we can't simply blame other countries, let's say china. but those countries -- policies in those countries do make a difference in some of the points made here about china's inability to protect intellectual property for the production of counterfeit goods and certainly currency mutilation are large factors. those are things that are obviously more difficult for us to deal with.
a lot of things we should work, but the things we can do within the things we've asked congress to focus on the others i i mentioned, taxes, energy costs and the regulation of particular as well as opening -- acting on the three pending trade agreements and enabling the president to negotiate other trade agreements around the world so we are not sending market shares to other countries. >> this congress is looking at a policy. you mentioned trade. as you know, it's not enough to simply buy america anymore. where to sell america and all the world the world tilts against trade agreements. take one-way trade into the to the united states and treat it and create jobs. and so mr. brill, how important is it to america's manufacturing the aggressively open new
markets, past trade agreements to level the playing field and seek more opportunity, especially. manufacturers can compete. by sharon brady, it's critical we have a trade policy to engage in global trade, one reducing barriers and opening marked a period as others have noted in the microsoft, pending agreement before congress are long overdue for policy unfortunately by delaying the implementation of the pending agreement with disadvantaging to advance explores and more concerning is mr. timmons says is the lack of the ability to create new agreements going forward. eventually hope to look at the agreement pending, but i am concerned by the fact that we
don't have the tools to further open new markets. >> thank you, chairman. >> congressman duffy. >> thank you, mr. chairman. thank you on a panel for coming in today. this phase of insurgency may be overused in the last year, that is a term i continue to hear as i am in a district talking when i asked them to explain, what do they mean when they talk about uncertainty? a lot of them say they are making my money, more to come up for not retiring and were seen across the country. oftentimes, they will come in different terms, talk about the death and what does that mean to? they are concerned then about a inflation. they are concerned about interest rates going up in the long term. they are concerned about tax increases would've been discussed discussed here in washington on a long-term tax policy, we seem to be going
year-by-year. in my area, the northwest corner of wisconsin, there's a lot of concern about what is happening with the epa. we have a large project industry in my district and all those things are coming together and creating uncertainties. they are not taking the risks they normally make tape. are you all seen that in your studies are your covers nations, that the uncertainty not a fairly from the business end of things, but actually from the government cited in his effect deemed our willingness of manufacturers to expand and grow in the pamela soho went to take a stab? mr. zandi. >> i think there's something to that argument, yes. i think american businesses in aggregate are in very good financial shape. we have to make the distinction between the large companies and smaller companies that are doing as well. in their totality, their profit
margins are very wide and getting cost structures down. it's no longer in my mind a question can businesses higher. i'm sure things are way and confidence in the great recession you don't forget that quickly for business person. i do think policy uncertainty has played a role. some of the policies come to fruition. and i'm not speaking to many of the policy itself, just the fact we've gone through this very significant debates and discussions. health care reform the financial regulatory foreign come in and on the tax code, debating things -- congress debated things that didn't come to fruition that made people nervous. cap-and-trade, immigration policy, card check. i do think the policy uncertainty is stating -- there hasn't been major legislative initiatives in the last six
months, but i do think -- i think a lot of business people and lots of industries all across the country, the one thing that makes them very nervous at this point they can't construct a narrative in their mind about congress and the administration are going to come to terms on the debt ceiling and ultimately on our fiscal situation. unless they can figure that out, they are going to be -- there were to fire people, but don't be slow to hire people. as you point out, that means higher interest rates, higher taxes. it could mean massive changes in government programs and those things make people very nervous and that seems to be nailed down. >> to piggyback on that point, we see more manufacturers current employees to work overtime or asking for temporary workers instead of engagement in long-term hiring and they are talking about the same issues i brought up, but also what you reference is the bill as well.
what's it going to cost of health care to hire new employees? specifically they pose regulation and reuse industrial boilers. at a time were under immense competition. we're struggling to stay alive in central and northern wisconsin and it's a huge part of our economy. and these proposed regulations, which are going to increase american standards, which are far about overseas than i think if we look at our environment, we all drink the same water and breathe the same manner and to center jobs in manufacturing therefore the standards this doesn't make sense. they make it difficult for manufacturing to compete on the global stage. obviously you guys are aware the
market could severely harm the paper industry it is good there's a bit of a delay but several other regulations coming down the pike. i birdie mentioned mention the ozone regulation. potential regulations from the epa. the recent decision by the nlrb and try to tell them where they can locate a production line. all these factor in to a decision on whether they'll do a business. are they going to do business in the united states? are they going to evaporate? i don't think anybody in government wants to see businesses evaporate or to emigrate. our job really needs to be to provide uncertainty and stability into the tax code expires in deal with the regulatory overreach we've seen from some of the agencies to
make business employment more stable. mr. chairman, i got back the remainder of my time. >> thank you, congress than mulvaney. >> thank you, mr. chairman. i'll begin by saying us to talk about any fracture and he, i am one of the ones who tends to focus on leveling the playing field as opposed to the government involved in specific programs. we heard testimony from senator stabenow and i think one of you mention the japanese policies on it as batteries. i think for every success story the government can point to like that, there are more and more failures. i remember as a kid to japanese government was in fault in the beta research in my recently heavily invested in plasma tvs versus leds or something like that. every time is on the success stories, a lot more failures, the government simply doesn't have information or proper motivation available to it to
make decisions about where investments are properly made. i want to level the playing field type of guy. i'll see if there's a couple things we can agree on is the panel. one of the things that are consistent across all your testimonies was important that any government policy to allow business to be more efficient, lower its labor and capital cost, lower transportation costs in order to encourage it to grow. that there is a indeed come you mention something about people being stuck in a particular location. i think the free tarot of labor and capital is and capital is one of things any government policy should greatly encourage. is there anybody, by the way, who disagrees with that? i'm new here. still trying to figure out ways to find things we can agree on. as we sit here and say there are folks here that the democrats have invited and republicans in folks who consider themselves
independent. as they sit there and see the free movement of labor and capital should be the goal of our government policies, is there anyone here who wants to defend what the nlrb is doing to billing? anybody? i'll take your silence as support for the fact that it's absolutely wrong, that what is happening here is the government is telling the business work and do business. i just wondered if anybody thinks -- and what suggestions on how to fix this, gentlemen. as you sit here and talk about in manufacturing policy, what can we do in order to encourage the free flow of labor and capital? of getting rid of the nlrb is an answer, let me know about it. but i got up into the panel as to what you think we can do in order to accomplish exactly what you gentlemen have suggested. >> mr. mulvaney, i want to turn your question on its head a little bit because one of the peculiar asked pics of our
economic strategy in the united states is that we have oneidas enters a competition for jobs. and i am not saying that is unique in the world, but it is pretty unique in the world. and the fact that so much we engage in this raise through incentives, either part is a reducing regulations between state is ultimately we have to compete with mexico and china and other countries that will be able to have lower labor costs, lower regulatory burdens. the thing we lack that other countries do and do it successfully as an economic development strategy. it doesn't mean the government telling you where you complete the fact tree. it does mean some sort of a national strategy and acknowledge were competing
against other company -- i mean, there's a bill that senator warner and congressman wolf, a bipartisan team introduced that if you want to be sure what the united states, the federal government will match that in a way to provide an incentive. that's another countries do. we're unique in the fact we don't have an economic development strategy. >> i think that we articulated it is exactly right with required to the free throw a capital neighbor and i think that we define a national manufacturing strategy, policies that can help facilitate this free flow of capital labor. when the focus on labor for a second interview a couple ideas that might help with respect to that. first is reform in the unemployment insurance system, that manufacturers have very high unemployment insurance causes. in the current context, many states obviously have had to take out loans from federal government to pay for their ui
and this bill is coming due and will be paid by businesses, particularly manufacturers is quite significant. you could provide relief and then i would also make some broader changes to the ui system. one reason why the chairman economy has come up in this context a couple times i've started so well is because they workshare program, some manufacturers don't have to distribute pain and don't lose skilled workers and hold onto them and that's important and these are skilled employment. we should reform our ui system to allow unemployed workers to get benefits currently training. there are programs we've been testing the congress has been testing in this regard. the ui program is a good place
to look in terms of manufactures. second, immigration policy. the immigration janissary university system. it will take 100 years to replicate what we've done in the university system. as our significant comparative advantage. i think of any foreign student comes to our countries, get a degree from the university of mania, ohio state, university of wisconsin, they should get a visa to stay. they earned it. these are the best and brightest in the world and the fountain of future business formation of job creation in manufacturing. in third, just until outside the box for you, again with regard to deliver cars, there's this really interesting move meant that i've had served among manufacturers and universities. manufacturers say listen, i've got a big scale problem,
particularly because my workforce is workforce is old, each income is and young folks coming up are just not interested in learning these skills. these companies go to the university and say hey, i'll give you money. you take and hire faculty, and though the lab, build an office building and that they have been put into your curriculum process. this solves a lot of problems. i think policymakers can really help facilitate this. they're similar ways of doing it, the one which provide matching grants to universities that participate in this is and that would be very helpful in addressing the jobs. that will take work and put the details of a lot of issues with respect to universities are sensitive about seeing any kind of academic freedom. you know, very understand that. i think this would be a good way to solve a lot of problems. >> thank you, gentlemen for the good ideas. >> dr. zandi, i know we're
remember one time, but i want to ask you again about persevere testimony and the do's and don'ts and will be affirmative and focus on the dues. i need to correct one thing on the record. when you mention ohio state which is a great university, and what to make sure penn state gets in there, too. >> that would be piling on. >> you have text texas a&m. that will come out of the vice-chairman time. can you go through some of the dues in what you should do in your testimony. maybe just by way of a quick list and maybe i can open up to the others as well. >> sure. i focused on later in my previous remarks, but i think we cannot do this to help facilitate flow of capital, lower the cost of capital with
respect to lowering the cost is transportation and distribution, which is so important to manufacturing amounts of energy is a mention. in terms of the cost of capital, would focus on two things enough that because i don't want to take too much time. i do think corporate tax reform is vital and i think it needs to be considered in a comprehensive way, that i think our goal should be to flatten the tax base, try to scale back as many deductions or eliminate any deductions that we can so that we can bring down the marginal rates and we can lower the marginal and affect the corporate tax rate for american businesses. another is a lot of debate about how higher corporate taxes. it is a plus if we can know with those amounts are we sure were. i think we can do that by addressing the swiss cheese in our corporate tax code. the other thing i would do is not going to small manufacturers.
one of the duties of manufacturing for our economy as it has a lot as big companies. people don't realize that a lot of small manufacturers tucked away that are very corrupt and are very competitive, sitting in lancaster county around pittsburgh or in ohio or wisconsin. you know, all those companies are not days. these are small companies. i think -- there's been a lot of companies that have these companies can get a loan. it didn't go into the bank and getting a loan. i think that is an initiative. i'm less concerned about that now. the one thing that really worries me in regard as a lack of equity capital, that this is where the dirtiest. we don't have investors taking a piece taken these companies. there's a lot of reasons for that, but i think there is a role perhaps for government to play your not directly making equity investments, but actually
helping finance indirectly through different means to provide equity capital. and don't try to pick winners and losers, the let the professionals do it. let the marketplace to it, but help facilitate the process. so those are two things we need to focus on and i'll stop right there. >> anyone else? a little more than a minute. >> sure, thank you. a couple quick points. i was talking about bringing down rates. and like to endorse.her zandi's comments about the ui reform, the opportunity where we can really improve labor market in manufacturing and elsewhere. with regard to your comments, about the excellent point. i think we need to pursue strategies to facilitate mobility of capital and that would include inbound investment
, encouraging tie reducing barriers to encourage foreigners to invest in the united states. but we also have to recognize the benefits for u.s. firms to be investing as well. they're a number of concerns that i share with regard to china and some other activities, but we should also represent china's large customer for u.s. manufacturing that we will all be better off it for facilitating inbound investment in permitting u.s. manufacturers and others to appropriately invest globally. >> you're down to 22 seconds. >> is like to respond to your question, but i also want to point out dr. zandi talking about skills committees. the president endorsed the skill certification system and involves community colleges. i think it important that we
don't overlook the importance of community colleges that can help us with addressing by skilled workforce issues. comprehensive tax reform, clearly a tax rate reduction is at the top of our list. also an energy policy to utilize resources will require an active engagement by congress and the administration to undertake. i would suggest that members of congress, both parties have really hard and pointed questions as well as provide the proper oversight to the regulating agencies. one very quick example, osha recently withdrew a proposed regulation to require manufacturing facilities to impose or to purchase hundreds of millions of dollars worth of noise abatement equipment to accomplish the same goals that are achieved through this little 5-cent foam pieces of your
protection equipment. it didn't make any sense. they did eventually retire. the real question is, who at the time to come up with this in the first place? we've been very, very careful and strong oversight on with the regulatory agencies are doing right now. >> congressman -- i want to have congressman mulvaney jumped ahead. we'll try to give you some extra time. >> thank you, mr. chairman. one last question. i appreciate you sticking around. i've heard across the entire panel today a consistent quote about tax reform. i think he used were comprehensive and also mention the rule of smaller size. how critical is that when we sit and talk about corporate tax reform here that it is just me on the corporation level level level level tease. when there is discussion to
raise individual rate at the end of 2012, that will have a huge and direct negative impact on manufacturers. the corporate tax rate is clearly a competitive disadvantage right now, the raising individual race would be a severe competitive disadvantage for us as well. >> dr. zandi, the same question? >> mcwhinnie took comprehensive reform of the income taxes low in a broader context. the reason i asked the question as it seems that. we have two debates. the debate about corporate tax reform in a separate debate in the message i'm trying to get out and i hope you time and with is. an area in between them is with the s. corporations and is really the corporation in terms of what it does, but it's taxed
as an individual. so what i'm hoping we can do here, mr. chairman, is have an understanding corporate tax reform include small businesses and s. corporations. the mac though that kind of think about cutting across businesses and individuals is looking at the tax expenditures and tax code, credits and reductions to make it very complex and reduces advocacy and the strategy should be to scale back or eliminated if we can do we can raise more revenue, but also accomplish everything we need to. >> and just add that the notion of a corporate tax, where a small large corporation and a large small corporation is completely different tax systems is completely illogical. the high tax rate for many individuals who are -- many business owners is a distortion that is taxing and d